In real estate practice, people sometimes seem to forget that in addition to the public law zoning, an apartment right also has a private law zoning under the subdivision deed. As a result, apartment rights are not infrequently under- or overvalued by appraisers. In this contribution, therefore, I discuss the perils surrounding the destination of the apartment right.
What is an apartment right?
By means of a notarial deed of division, it is possible to divide one building into several independent units: apartment rights. With an apartment right, the apartment owner acquires a right to a share in the (common) property. The subdivision deed states, among other things, how many apartment rights there are and what rights and obligations belong to each individual share. For example, the division deed determines what private-law purpose a particular apartment right has.
Owners association (VvE).
The VvE is the association of apartment owners that, as a legal entity, manages the community. The VvE is authorized to represent apartment owners in and out of court. The most important decisions are made by the meeting of owners. For example, the meeting can amend the subdivision deed and its regulations with a four-fifths majority of the total number of votes. There are also exceptions to this; the private law zoning - which is determined in the subdivision deed and its regulations - can usually be amended with a simple majority of the total number of votes.
Dual use: public and private law
At the time of the division, one will always have to take into account the current zoning plan. If it follows from this that the public law single zoning is "retail", then dividing for the purpose of realizing dwellings will be a difficult story. In the Netherlands, almost every piece of land is zoned under public law. Checking the public-law zoning in the zoning plan is therefore advisable in all cases when buying real estate.
In addition to the public law zoning, the subdivision deed and the associated subdivision regulations may also contain a private law zoning. This often constitutes a one-to-one adoption or further elaboration of the public-law zoning in effect at the time. For this reason, the public and private destinations are usually not far apart at the time of the division. However, this may be different if the division took place decades ago. There is then a good chance that the public-law destination has changed in the interim, perhaps even several times. The owners' meeting can then close the discrepancy between the public and private zoning. If the O.A. wants to cooperate with this new public-law zoning, the O.A. briefly has two options: either choose to temporarily allow the different use or amend the subdivision deed. Since the latter option costs more time and money, many VvEs choose to temporarily allow deviant use. However, this does not permanently resolve the discrepancy, but rather "temporarily glues" it, so to speak. This is because it is not possible for the CoE to grant permanent permission for deviant use.
The foregoing results in apartment rights occasionally being sold and transferred at a different destination than agreed upon. For example, if the public law destination of a cadastral property is "residential and retail" and the apartments are actually also used in that manner, it is still possible that the private law destination is "offices."
As soon as the meeting of owners of the VvE sees reason to no longer allow the deviant use, the brand-new apartment owner suddenly finds himself in an unexpected predicament. This is because if the apartment owner does not have a majority in the meeting, he is entirely dependent on other apartment owners to amend the division deed and its regulations.
Valuation dependent on private law use
Obviously, the valuation of property is inextricably linked to its purpose. Residential space, for example, is generally worth more than office space or agriculturally zoned land. Yet in practice, apartment rights law turns out to be so complex that experts such as brokers or appraisers sometimes forget to check the private-law destination. As a result, it can happen that a buyer is under the impression that he is buying residential space, but the private-law zoning from the subdivision deed gives a different zoning. Had the buyer known that, the purchase price would probably have been lower.
Apart from the question whether it is possible to hold the broker or the appraiser liable afterwards, you will want to know during the negotiations what the exact destination of the apartment right is. This is why I advise you to always have the transaction reviewed in a timely manner by a specialized lawyer when buying or having one or more apartment rights valued.
